A Specialist In Rebounds To Run Kmart

By KENNETH N. GILPIN

Published: June 6, 1995

The Kmart Corporation said yesterday that it had hired Floyd Hall, a specialist in pumping new life into sagging retailers, as its new chairman and chief executive.

Mr. Hall, who is 56, replaces Joseph E. Antonini, who resigned under pressure in March as president and chief executive. Mr. Antonini, who had resigned earlier as chairman, was forced out by disgruntled shareholders and a board that could no longer give him its undivided support.

Although Mr. Hall has a solid retailing record and has made a fortune in the business, his appointment surprised Wall Street analysts and Kmart shareholders. Since Mr. Antonini resigned, it had been widely assumed that Kmart, the nation's second-largest retailer, would tap a better-known executive.

"I am sure Mr. Hall is a very fine executive, and it is a very good thing for Kmart to have a hand at the tiller," said Kurt Barnard, president of Barnard's Retail Marketing Report, an industry newsletter based in Scotch Plains, N.J. "But he is not the heavyweight Wall Street and everyone else expected. He was not on anybody's short or long list."

Still, investors seemed happy yesterday. In heavy trading on the New York Stock Exchange, Kmart stock rose $1.375, or nearly 11 percent, to $14 a share.

Nevertheless, analysts said, Kmart's problems will test the abilities of any executive, no matter how well known.

Referring to the late founder of Wal-Mart Stores, one portfolio manager who spoke on condition of anonymity said, "Kmart could have brought Sam Walton back from the dead and the challenges would still be there."

The portfolio manager said the company faced two, interrelated problems: "Can Kmart have prices as low, or in some cases lower, than Wal-Mart's, with a cost structure that is nowhere close to what Wal-Mart's is? Second, what is their long-term strategy to compete with Wal-Mart, Kmart's biggest competitor, and its biggest problem?"

In a telephone interview, Mr. Hall acknowledged the enormity of the task and said it was a big reason for taking the job.

"The challenge and opportunity to put Kmart back on the right track is very motivational for me," he said.

Details of Mr. Hall's compensation package will not be released until next week, Kmart said. But Mr. Hall, who signed a five-year contract, said his pay would be heavily contingent on how Kmart performed. "I am predominantly on an option package," he said.

Asked how he intended to improve Kmart's competitive position against Wal-Mart, the nation's biggest retailer, Mr. Hall said, "The most immediate thing we can do is to look hard at the assortment of products that are being offered and to present the product better to the customer.

"We know what the customers' needs and wants are," he said. "We just need to do a better job in supplying them."

In the more than two months since Mr. Antonini resigned, the names of a number of executives had been floated as possible replacements, including Michael C. Bozic, chief executive of Hills Department Stores, and Roger N. Farah, the former head of merchandising at R. H. Macy & Company who is now chief executive at the Woolworth Corporation. Both men were rumored to have been offered the job and to have turned it down; the company denied the rumors.

At the annual meeting of Kmart last month, Donald S. Perkins, a director who has been serving as chairman since January, when Mr. Antonini was forced to give up that post, acknowledged that the company was having a hard time finding a successor.

In an interview yesterday, Mr. Perkins said his comments at the meeting had been misinterpreted. "We called a lot of people," Mr. Perkins said, "but no one turned down an offer. The only offer we made was to Floyd Hall."

Mr. Hall began his 39-year career in retailing at age 18, when he went to work as an appliance salesman for Montgomery Ward. Since then, Mr. Hall has become known as an entrepreneurial and innovative executive, who has successfully developed healthy businesses and turned around ailing ones.

Much of his reputation -- and fortune -- were established in the mid- to late 1980's, when he served as chairman and chief executive of the Grand Union Company, then the 11th-largest supermarket chain.

Sir James Goldsmith, the British-French investor who bought Grand Union in 1973, hired Mr. Hall to run the company in 1984. When he arrived, the company had just posted a loss and had shed 400 stores.

Four years later, Mr. Hall and a group of investors bought the company in a leveraged buyout for $655 million. A year later, the investor group sold Grand Union to a group that included Salomon Brothers Inc. and Miller Tabak Hirsch & Company, an investment bank based in New York, for $1.2 billion.

Much of the money used to purchase Grand Union was borrowed, but Mr. Hall personally took home almost $40 million from the sale. In 1989, he used that money to start the Museum Company with two partners. Until yesterday, Mr. Hall served as chairman and chief executive of the company, which sells museum reproductions at 63 stores in the United States and Canada.

Earlier in his career, from 1981 until 1984, Mr. Hall ran Target Stores, the discount retailing division of the Dayton Hudson Corporation. During his tenure at Target, a direct competitor of Kmart, Mr. Hall grew the chain to 205 stores from 97; its sales rose to $3.1 billion from $1.3 billion.

"The fact that he ran Target is a plus," the portfolio manager said. "But the last time he worked in general merchandise was a dozen years ago, and the environment has changed a great deal since then." FLOYD HALL Born: Sept. 4, 1938. Hometown: Montclair, N.J. Education: High school graduate. Attended Bakersfield Junior College in California and Southern Methodist University. Advanced Management Program, Harvard Business School, 1977. Career highlights: 1956-70, various positions, Montgomery Ward; 1970-73, vice president, Singer Stores; 1974-81, president and chief executive, B. Dalton Booksellerl 1981-84, chairman and chief executive, Target Stores; 1984-89, chairman and chief executive, Grand Union; 1989-95, chairman and chief executive, The Museum Company. Family: Married to Janet Phillips; one son and one daughter. Hobbies: Golf, reading, fishing, tennis. Collects classic cars.